TaxTMI 
TaxTMI 
2010 (6) TMI 91
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....orks contract'. It asserts that the works pursued by it fall within the purview of 'works contract' under the respective State enactments dealing with Sales Tax or Value Added Tax, as the case may be and further claims to be paying the taxes under the State Legislations on the material component, in accordance with the State Taxes Legislations including in Andhra Pradesh. 3. The impugned circular issued by the Government of India, Ministry of Finance (the 1st respondent), to the extent of the clarification item, relevant and material for the purposes of the case (Reference Code No. 097.03, dated 04.01.2008), reads: "To Chief Commissioners of Central Excise (All) Chief Commissioners of Central Excise & Customs (All) Directors General (All) Commissioners of Service Tax (All) Commissioners of Central Excise (All) Commissioners of Central Excise & Customs (All) Sub: Amendment to Circular No. 96/7/2007-ST dated the 23rd August, 2007 - Clarification in respect of renting of immovable property service and works contract service - Regarding. In the circular No. 96/7/2007-ST dated the 23rd August....
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....ble. In view of the above, a service provider who paid service tax prior to 01.06.07 for the taxable service, namely, erection, commissioning or installation service, commercial or industrial construction service or construction of complex service, as the case may be, is not entitled to change the classification of the single composite service for the purpose of payment of service tax on or after 01.06.07 and hence, is not entitled to avail the Composition Scheme. 2. Trade and field formations may be informed accordingly. (G.G. Pai) Under Secretary (TRU)" 4. The petitioner is an assessee for service tax, on the rolls of the 2^nd respondent. It obtained centralized sales tax registration for the several taxable services rendered by it under the category consulting engineering, construction service in respect of commercial or industrial buildings and civil structure, erection, commissioning and installation, construction of residential complexes, maintenance or repair services, site preparation and clearance and transport of goods by road. 5. The grievance of the petitioner is that in relation to the on going works being executed and in respect of which it had pa....
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..... 10. Sub-Secs. 39(a), 25(b) and 30(a) of Sec. 65 of the Act define certain activities relevant to the case as under: [39(a)] "erection, commissioning or installation" means any service provided by a commissioning and installation agency, in relation to,- (i) erection, commissioning or installation of plant machinery, equipment or structures whether pre-fabricated or otherwise; or (ii) installation of - (a) electrical and electronic devices, including wirings or fittings therefore; or (b) plumbing, drain laying or other installations for transport of fluids; or (c) heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work; or (d) thermal insulation, sound insulation, fire proofing or water proofing; or (e) lift and escalator, fire escape staircases or travelators; or (f) such other similar services; This definition with reference to the taxable service is dealt with by Clause (zzd). 11. The taxable services covered by Clause (zzq) (commercial or industrial construction services) is defined in sub-section [25(b)] which reads as under: (25b) "c....
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....to tax as sale of goods, and (ii) such contract is for the purposes of carrying out, -- (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases or elevators; or (b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or (c) construction of a new residential complex or a part thereof; or (d) completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or (e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects; 14. Sec.65A of the Act enacts that the classification of taxable services shall be determined accor....
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....ract. (2) The provider of taxable service shall not take CENVAT credit of duties or cess paid on any inputs, used in or in relation to the said works contract, under the provisions of CENVAT Credit Rules, 2004. (3) The provider of taxable service who opts to pay service tax under these rules shall exercise such option in respect of a works contract prior to payment of service tax in respect of the said works contract and the option so exercised shall be applicable for the entire works contract and shall not be withdrawn until the completion of the said works contract. 18. The 2007 Rules were notified on 22.5.2007. As already noticed these Rules were issued by the Central Government in exercise of the powers conferred by Sections 93 and 94 of the Act. Sec.93 of the Act empowers the Central Government, if satisfied that it is necessary in the public interest, to exempt generally or subject to such conditions as may be specified in the notification, taxable service of any specified description from the whole or any part of the service tax leviable thereon. Under this provision the Central Government may also, if satisfied that it is necessary in the public interes....
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....nefits of the composition scheme is only after an option is exercised under Rule 3(3) of the 2007 Rules and this provision specifically enjoins a disqualification forexercise of such option where service tax had been paid in respect of a works contract. To put it succinctly, where service tax has been paid in respect of a works contract, the eligibility to exercise an option to avail the benefits of the composition scheme under the 2007 Rules is excluded. 23. In the case on hand the challenge is confined to the impugned circular issued by the 1st respondent. The provisions of Rule 3(3) of the 2007 Rules are not challenged. 24. On the analysis above and in our considered view the impugned circular (to the extent it is challenged i.e., in relation to reference code 097.03 dated 04.01.2008) is wholly in conformity with the provisions of Rules 3(3) of the 2007 Rules. The fact that the nature of the works executed by the petitioner which hitherto fell within the ambit of the taxable services enumerated in Clauses (zzd), (zzq) and (zzzh), now fall within services classified as a works contract in Clause (zzzza), does not in our considered view have any bearing on the entitlement of....